Israel–Iran war shock to hit dollar — Petrol spike, rate stalemate in SA, warns leading economist

Описание: DOLLAR ON THE BACK FOOT AS MIDDLE EAST TENSIONS RISE - KNOCK-ON EFFECTS ON SOUTH AFRICA

With the threat of U.S. involvement in strikes on Iran’s nuclear facilities, the dollar is expected to weaken further against currencies like the euro, says economist Dawie Roodt. He predicts the greenback could fall to R1.20 per euro in the coming months, describing the dollar as “probably overvalued where it is at the moment.

In an interview with National Security News, Roodt noted that a spike in oil prices is expected during conflicts in the Middle East—especially when oil-producing nations are involved. However, unlike in past crises, the dollar is not rallying as a safe-haven currency.

If history is anything to go by, an initial spike in the oil price is usually followed by a return to previous levels, or even lower, within a few months, Roodt said. He expects prices to climb in the short term but gradually decline in the medium to longer term—depending on the scale of the conflict. “If another oil-producing country gets involved… then, of course, all bets are off the table,” he added.

IMPACT ON SOUTH AFRICA

Petrol prices in South Africa are likely to increase by 20 to 30 cents per litre, but Roodt says this should not significantly impact inflation. The rand may face short-term pressure due to oil’s importance in South Africa’s import basket but is expected to stabilise—and even strengthen—as the dollar continues to weaken.

Inflation figures “just below 3%” are encouraging, Roodt said, and in normal circumstances, would create space for interest rate cuts. However, given the geopolitical uncertainty, he expects the Reserve Bank to hold rates steady for now, despite having room to lower them by 30 to 50 basis points.

TARIFFS AND FATF GREY LIST

On looming U.S. tariffs—currently paused until 9 July—Roodt warned that a failure to reach agreement could see the 31% tariff imposed on South African exports. That, he said, would further undermine the economic outlook and likely deter any interest rate cuts.

As for South Africa’s hope of being removed from the FATF grey list, Roodt said the country has made progress by meeting all 22 required action items. However, delisting hinges on the outcome of an on-site assessment in October. Based on discussions with international experts, Roodt believes the key to full compliance lies in implementing the Zondo Commission’s recommendations on state capture and corruption.

“The problem is,” he said, “South Africa is seen as a country that doesn’t take enforcement seriously—or hold wrongdoers to account.”